Roofing contractors face potential liability from numerous aspects of their businesses, including employee-operated company vehicles and equipment; work-related injuries; property and equipment damage; “disappearing” materials; defective work and materials; and a multitude of employment issues, such as wrongful termination claims. All reputable contractors protect themselves and others by purchasing Commercial General Liability (CGL) Insurance. The scope of available coverage runs from basic policies to wide-ranging “multi-peril” policies, which bundle multiple coverages to address a number of potential risks. A multi-peril policy for roofing contractors may include coverage for damage arising from defective work, operation of vehicles or equipment, worker’s compensation, employment practices and even employee theft.

Insurance simply represents the transfer of risk from the insured to the insurance company. Taking a proactive approach to understanding the insurance you purchase allows you to maximize that risk transfer or at least know where you bear the majority of risk.

The Basics

A CGL insurance policy generally consists of three primary sections:

The insuring agreement.

The exclusions.

The endorsements.

The insuring agreement defines what the policy covers and is generally written quite broadly. Virtually all CGL insurance policies require that such property damage or personal injury result from an “occurrence,” typically defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”. Many of the terms within the insuring agreement are specifically defined for purposes of the policy and require analysis, depending on the claim asserted and the particular coverage implicated.

The exclusions are simply that— claims and/or damages the insurance company will not cover. For example, CGL insurance policies commonly contain exclusions for “Contractual Liability”, defined as “bodily injury or property damage the insured is obligated to pay by reason of the assumption of liability in a contract or agreement”. Since many subcontracts include express indemnification clauses, this can be a major area of concern for the contractor.

Endorsements are documents attached to a policy that amend the terms in some way and can expand or restrict coverage or even modify the definitions. One common misperception is the belief that endorsements are synonymous with exclusions. To the contrary, it is not uncommon for an endorsement to narrow the scope of an exclusion or eliminate an exclusion entirely. Endorsements can be used to tailor a policy to a particular industry or trade, and insurance companies use them to modify standard Insurance Services Office (ISO) policies to comport to their particular philosophy, such as cancellation and non-renewal provisions or requiring binding arbitration to settle coverage disputes. Endorsements are usually identified by description and form number as part of the Declarations Page.

There are common Endorsements that result in additional exclusions. One of particular concern to any contractor is the “Independent Contractors and Subcontractors Limitation”, which provides that claims for bodily injury or property damage caused by independent contractors/subcontractors used by the insured are not covered unless that independent contractor/subcontractor maintains its own insurance coverage with limits equal to the insureds and names the insured as an Additional Insured on its policy.

To limit your personal exposure, it is imperative you do not ignore the Endorsements! It is an important part of your policy and you need to understand the terms.

Duty to Defend Versus Duty to Indemnify

An insurance policy creates two separate and distinct obligations for the insurance company: the duty to defend and the duty to indemnify.

The duty to defend consists of the insurance company’s obligation to hire counsel to defend the insured in response to a claim. That obligation is not
dependent upon the insured’s liability but whether the allegations made by the plaintiff states a claim potentially triggering coverage. The duty to defend
exists even if the claim is groundless, false or fraudulent.

The duty to indemnify is the insurance company’s obligation to pay the successful plaintiff when that claim falls within the scope of the insurance policy.
In the insuring agreement, the insurer promises to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”

It’s often said that the duty to defend is broader than the duty to indemnify. The carrier’s duty to defend exists when the claim potentially triggers overage, while the duty to pay exists only when the insured is obligated to pay damages and the claim falls within the coverage provided by the policy.

Owens Corning Roofing Platinum Preferred Roofing Contractors is considered an exclusive contractor network; less than one percent of Owens Corning Contractors have Platinum Preferred status. To be accepted into the network, PetersenDean was required to meet the following eligibility requirements including passing an installation workmanship inspection, carry at least $1 million in general liability insurance, and be screened for financial stability and customer service.

“As a roofing company with 33 years of industry experience serving Arizona, California, Florida, Nevada, and Texas, PetersenDean is honored to become a member of the Owens Corning Roofing Platinum Preferred Contractor Program,” said Tim Ramage, vice president of consumer sales, PetersenDean Roofing & Solar Corporate Division. “We will launch our partnership with Owens Corning in California and then extend our services into other states.

“Wherever we are consulting with prospective customers, we are aware that purchasing a new roof is a significant decision. We are proud to have Owens Corning Roofing supporting the commitment to excellence that we bring to every project,” Ramage noted. “Additionally, we place value in the fact the Owens Corning roofing products are made in the USA and have a reputation for superior material advancements leading to long term performance.”

Ramage said the Owens Corning roofing products that will be used by PetersenDean will be manufactured in the company’s Compton, Ca., plant and he estimates that PetersenDean will use about 6.5 million square feet of shingles and roofing accessories annually. “We will primarily be installing Owens Corning TruDefinition Duration and Owens Corning Woodcrest shingles,” he added.

“Owens Corning Roofing Platinum Preferred Contractor Network members are chosen based on their proven market and industry leadership,” said Bill Mabry, Owens Corning Roofing Contractor Network leader. “This network underscores Owens Corning Roofing’s commitment to providing value within the building materials industry and ensuring our roofing contractors have the tools and business solutions they need to grow their business.”

Through the Owens Corning Roofing Platinum Preferred Contractor Network, PetersenDean is able to provide peace of mind to its customers, including extended system limited warranties that also offer a limited lifetime workmanship coverage.

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January/February 2018

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About Roofing

Roofing is a national publication that unravels, investigates and analyzes how to properly design, install and maintain a roof system. Through the voices of professionals in the field, Roofing’s editorial provides a unique perspective.